I.T. MIRROR 23-24 VOL 8

Vol. 8 January 24 Income Tax Bar Association Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org

Glimpses of Blood Donation Camp on 07/12/2023 jointly organized with The Gujarat State Tax Bar Association and Tax Advocates Association Gujarat

2 Chairman's Message 3 President's Message 4 Hon. Secretary's Message - CA (Dr.) Vishves Shah - CA Ashish Tekwani - CA Jaykishan Pamnani 5 10 17 19 32 36 30 25 38 Legal updates in relation to Chartered Accountants - CA Parag Raval Strategic Insights into Section 41 with easy to understand examples - CA Dipak C. Dama ITR Filing options Till A.Y. 2023-24 and A.Y. 2024-25 onwards - CA Mayur J Sondagar Benami Law - Evolving jurisprudence & stinging impact of the law with special focus on loan transactions - CA Harit Dhariwal and Srishti Anumod CA Certificate for ITC mismatch under Circular 183 & 193 - CA Saradha Hariharan Two Recent Dangerous Changes in GST - Rule 88C and Rule 88D - CA Harshil Sheth IIT Big Data - Surge in Automated Notices - CA Yash Shah Legal Heir v. Legal Representatives - CS M. Govindarajan Common Area - Common Ownership - Common Questions - CA Harsh Mehta and Adv CS Lokesh Shah 1 Adv. Ashutosh R. Thakkar Adv. (Dr.) Dhruven V. Shah Adv. (Dr.) Kartikey B. Shah Dhruvin D. Mehta (IPP) Bhavesh K. Govani Hiren C. Thakkar CA Kenan M. Satyawadi Narendra D. Karkar CA Parth H. Doshi Parth K. Katharia CA Pratik P. Kaneria CA Suvrat S. Shah Adv Dhiresh T Shah President Emeritus CA Ashish T. Tekwani President CA Shridhar K. Shah Vice President CA Jaykishan P. Pamnani Hon. Secretary CA Maulik B. Patel Hon. Joint Secretary CA Shivam K. Bhavsar Hon. Treasurer CA (Dr.) Vishves Shah Chairman CA Nisha Tekwani CA Suvrat Shah CA Rajesh Mewada Co – Chairman Jinal Shah CA Kaivan Parekh CA Pratik P. Kaneria Members Room No. 204, Nature View Building, Nr. Mrudul Tower, Ashram Road, Ahmedabad - 380009. Tel. No. : 079-48011947 I e-mail: [email protected] I www.incometaxbar.org Mouth Piece of Income Tax Bar Association INVITEE MEMBERS COMMITTEE MEMBERS IT MIRROR COMMITTEE OFFICE BEARERS Vol. 8 - JAN 24 CONTENTS

Chairman’s Message CA (Dr.) VISHVES SHAH Chairman 2 Dear Esteemed Members, It is with immense pleasure and pride that I extend my warm greetings for the New Year to all our readers of this esteemed I T Mirror. As the Chairman of I T Mirror Committee, I am delighted to share with you the exceptional content that graces the pages of this journal, and to commend the talented contributors who continue to elevate the quality and significance of our journal. In the world of taxation, staying abreast of the latest developments, legislative changes, and emerging trends is of paramount importance. I am thrilled to acknowledge the exceptional work of our contributors who, through their insightful articles, have created a repository of knowledge that is not only relevant but also indispensable for professionals, scholars, and enthusiasts in the field of taxation. The depth and breadth of the articles presented in this journal are a testament to the expertise and dedication of our esteemed contributors. The tax landscape is dynamic and complex, and our writers have demonstrated an exceptional ability to explain the same in simple and easy words. As we navigate the ever-evolving tax landscape, this journal remains committed to providing a platform for rigorous scholarship, practical insights, and thought leadership. It is my hope that the articles presented here not only inform but also inspire our readers to engage in critical discourse and contribute to the advancement of tax theory and practice. Thank you for your continued support and engagement with our tax journal. I also invite all the members and readers to register for the most awaited and flagship event Two Day Tax Conclave 2024 to be held on 15th and 16th March 2024 at AMA Ahmedabad and have a unique opportunity to immerse yourself into learning. Warm regards, CA(Dr.) Vishves A. Shah Chairman, IT Mirror Committee Income Tax Bar Association

3 Dear Members, It is with great pleasure and pride that I extend my warmest New Year Greetings to each one of you. As the President of this esteemed organization, I am honoured to address you in this new year in the 8th edition of I T Mirror for the Activity Year 2023-24. The year 2024 is the year which will transform India and World both technologically and economically. We at Income Tax Bar Organization and as IT Mirror Committee have always strived to be a beacon of knowledge and enlightenment, and the articles we publish play a pivotal role in achieving this mission. I am delighted to witness the high calibre of writing and the depth of insight that our contributors consistently bring to the table. The richness and diversity of topics covered truly reflect the intellectual vigor of our community. I would like to take this opportunity to acknowledge the tireless efforts of each writer who has contributed to our platform. Your dedication to upholding the highest standards do not go unnoticed. You are the driving force behind the success of ITMirror. The diversity of perspectives and voices represented in our articles is a testament to the inclusivity and openness that define our community. As we celebrate the achievements of our writers, let us also reaffirm our commitment to providing a platform where ideas can flourish, and knowledge can be shared. In continuance to that we are coming up with the most sought GyanYagna event Two Day Tax Conclave 2024.It is a unique two day event where knowledge sharing is the primary focus. The registrations for the event are open To register for TWO DAY TAX CONCLAVE 2024 click here https://tinyurl.com/PAYITBA OR https://tinyurl.com/TDTC24 Thank you all for your unwavering dedication and for making our organization a hub of intellectual excellence. Warm regards, CA Ashish Tekwani President Income Tax Bar Association President’s Message CA ASHISH TEKWANI President

Dear Members, As the Secretary of our esteemed Income Tax Bar Association, I wish you all Happy New Year 2024. May the coming year bring loads of success and happiness to all of the members of the Association. I am also pleased to express my admiration for the exceptional articles featured in our recent publications. These articles serve as a testament to the high caliber of scholarship and expertise within our community and members. Our journal has consistently aimed to be a reliable source of insights into the intricate world of taxation, and I am proud to acknowledge the unwavering dedication of our contributors. The depth of analysis, clarity of presentation, and relevance of the topics covered reflect the commitment of our authors to advancing the discourse in income tax matters. Each article is a valuable contribution to our collective understanding of the complexities and nuances of tax law. The authors' meticulous research and thoughtful perspectives elevate the discourse, providing practitioners, academics, and enthusiasts with a comprehensive resource for staying informed on the latest developments in this dynamic field. Thank you for your engagement, and I look forward to the continued success of our journal. I also invite you to be a part of the upcoming event Two Day Tax Conclave 2024, which is the 5th Edition of the Tax Conclave, and register fast for this landmark event in the professional community in Gujarat. Happy reading!!! Warm regards, CA Jaykishan Pamnani Hon. Secretary Income Tax Bar Association Hon. Secretary’s Message CA JAYKISHAN PAMNANI Hon. Secretary 4

Although legal updates brought in herein below mostly impacts chartered accountants; these are equally important for and applicable to all professionals. Knowingly or unknowingly we commit certain errors which might put us in hot waters. Kindly go through the following updates. 1. CA writing to 'Whomsoever it may concern” on a certificate reprimanded by ICAI for professional misconduct The Disciplinary Committee of ICAI in the matter Shri H.G. Nagaraju Vs. CA. Lingaraj M. Pujari has held that CA writing to whomsoever it may concern on a certificate reprimanded by ICAI for professional misconduct. The Board of Discipline vide Findings dated 10th February 2023 was of the view that CA. Lingaraj M. Pujari (M.No.225579) is Guilty of “Other Misconduct” falling within the meaning of Item (2) of Part-IV of the First Schedule to the CAAct, 1949read with Sec 22 of the said Act. The Board has carefully gone through the facts of the case along with the oral and written representation of CA. Lingaraj M.Pujari. As per the findings of the Board as contained in its report, the Respondent was appointed by the Company vide its appointment letter dated 9th January 2017 for issuing a Certificate showing expenditures which are not supported by any bills, vouchers, documents, etc. and unapproved payments from the Financial Year 2011-12 to the Financial Year 2016-17. The Respondent issued a Certificate of expenditure dated 31st January, 2017 for the financial years 2011-12 to 2016-2017 where no support or approvals were available. The Certificate issued by him was not addressed to the Company but addressed to “To Whomsoever It May Concern” and the purpose for which the same had been issued was not specified therein. The Board viewed that Guidance Note issued by the Institute (ICAI) i.e. “Guidance Note on Reports or Certificates for Special Purposes” clearly states that there is no standardized format for reporting on such engagements. Instead, certain basic elements were identified which include to identify addressee. However, it is also mentioned that in some cases such Certificate or report could be for other intended users hence, could be issued to such other unidentifiable user. However, since in the instant case, the Respondent had been appointed by the company and the Certificate was not addressed to the company but to unidentified users by usage of phrase “To Whomsoever It May Concern”, the Board was of the view that the very purpose for which the Certificate had been issued by the Respondent becomes questionable and misleading. The Board on bare perusal of the entries in the Annexures to the Certificate issued by the Respondent noted that the majority of the entries provided therein which were allegedly unapproved, pertained to the Complainant only. Thus, the Board was of the view that the act of the Respondent of issuing a Certificate addressed to unidentified users indicates that the same had been issued by him in collusion with the other directors of the company. The Board was of the view that it was the duty of the Respondent to perform a thorough and careful examination of the fact/data and issue an unbiased certificate which in the instant case was lacking. Legal updates in relation to Chartered Accountants - CA PARAG RAVAL 5

I. T. MIRROR (2023-24) The said compromising conduct of the Respondent shows his malafide intention of acting in collusion with the other directors of the company which is clearly unbecoming of a Chartered Accountant and thus, has brought disrepute to the profession. Accordingly, the Board held the Respondent guilty of “Other Misconduct” falling within the meaning of Item (2) of Part-IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act. Thus, upon consideration of the facts of the case, the consequent misconduct of CA Lingaraj M. Pujari (M. No.225579) and keeping in view his oral and written representation before it, the Board decided to Reprimand of CA. Lingaraj M. Pujari (M. No.225579). 2. CA guilty of misconduct for having COP while being in Full Time Employment, it was not intimated to the ICAI The ICAI Board of Discipline in the matter of CA. Abhay Batra has held CA guilty of misconduct for having COP while being in Full Time Employment. An action under Section 21A (3) of the CA Act, 1949 was contemplated against CA. Abhay Batra and communication dated 1st March 2023 was addressed to him thereby granting him an opportunity of being heard in person and/or to make written representation before the Board on 17th March 2023. The Board has carefully gone through the facts of the case alongwith the oral representation of CA. Abhay Batra. As per the Findings of the Board as contained in its report, it is evident that from 1st September 2011 to 1st October 2016 the Respondent held the Certificate of Practice while being in full time employment. Although, there is no evidence to indicate that he derived any monetary benefit out of holding the said Certificate of Practice while being in full time employment and with a slight alertness, he could have informed to the Institute about his employment and might have retained his Certificate of Practice with part time status, however, the fact remains that holding the Certificate of Practice while being in full time employment is a violation of the provisions of Regulation 190A of the Chartered Accountant Regulations, 1988 on the part of Respondent. Accordingly, CA. Abhay Batra was held Guilty of Professional Misconduct falling within the meaning of Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. Thus, upon consideration of the facts of the case, the consequent misconduct of CA. Abhay Batra and keeping in view his oral representation before it, the Board decided to reprimand CA. Abhay Batra (M.No.520590). 3. CA debarred for 3 months for not obtaining external Debt confirmation while doing Audit The Disciplinary Committee of ICAI in the matter of CA Binaya Kumar Jain has debarred Chartered Accountant for 3 months for not obtaining external Debt confirmation while doing Audit. That vide findings under Rule 18 (17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 dated 11.02.2023, the Disciplinary Committee was, inter-alia, of the opinion that CA. Abhay Balkrishna Upadhye (M. No. 049354) (hereinafter referred to as the Respondent”) was guilty of professional misconduct falling within the meaning of Items (5), (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The Committee noted that the instant matter relates to the statutory audit for the financial year 2017-18 of M/s Sunil Hitech Engineers Ltd. (hereinafter referred to as the “Company”) undertaken by the Respondent. The Respondent is held guilty on the following grounds: 1. Respondent did not perform the proper audit procedure in disclosing the step-down subsidiary company in the consolidated financials of the company and merely relied upon the management's representation. 6

I. T. MIRROR (2023-24) 7 2. Company had not given a complete, sufficient, and proper disclosure of Bank Guarantee (BG) and letter of credit (LOC) under the head contingent liability in its financial statements for the period ended 31st March,2018 and the Respondent has failed to raise any objection/report for such a non-disclosure and violation of accounting standards by the management of the Company. 3. Respondent while performing the audit for the financial year 2017-18 did not obtain external confirmation of book debts as additional evidence along with management representation. As regards to the charge of non-disclosure of a step-down subsidiary in the consolidated financials, the Respondent mentioned that in his written statement to PFO vide letter dated 20th December 2021 he specifically stated that letter was not made available to him, and the said point was not in the agenda of the board meeting. This clearly means that he checked the board meeting agenda. He further submitted that since the step-down subsidiary is not disclosed to him, it is not possible to assess its equity share, turnover, and number of employees from a materiality point of view. With regards to the charge about insufficient and improper disclosure of bank guarantees under the heading contingent liability, he mentioned that the liability of Rs 66.51 crores of subsidiary was a consolidation of actual liabilities outstanding at year-end of loans/LC/BG. With regard to the charge about non obtaining external conformation about debtors, he had submitted his written statement to Prima-facie opinion vide letter dated 20th December 2021 wherein he had annexed copies of letters seeking conformation of liability. The Committee, after consideration of the same and after listening to the Respondent at length, decided to reserve its decision. Thereafter, this matter was considered by the Committee in its meeting held on 6th April 2023 wherein the same members, who heard the case earlier, were present for consideration of the facts and arriving at a decision by the Committee. Accordingly, the Committee, keeping in view the facts and circumstances of the case, the material on record and the submissions of the parties, the findings of the Disciplinary Committee, and the various submissions of the Complainant and the Respondent on the findings of the Disciplinary Committee, gave its decision. Committee noted charges against the Respondent and observed that the Respondent has clearly failed to apply his audit procedures diligently, failed to report the violation of an accounting standard made by the management of the Company, and also failed to report the existence of such a subsidiary SMC, which was not disclosed in the financials of the auditee company. The Committee further observed that the disclosure in respect of contingent liability given in the financials of the company was not sufficient and proper, and the respondent, as the company's auditor, failed to report the same in his audit report. The Committee also noted that the Company, whose financial position as on 31st March 2018 was sound enough, suddenly went into liquidation in September 2018 raises questions about the diligence exercised by its auditor. Therefore, keeping in view the facts and circumstances of the case, material on record, and submissions of the Respondent before it, the Committee ordered that the Respondent, CA. Abhay Balkrishna Upadhye (M.No.049354) of M/s. K KMankeshwar& Co., Chartered Accountants, Nagpur be removed from the Register of members for a period of Three months along with a fine of Rs.1,00,000/- (One lakh Rupees Only). 4. CA guilty of Misconduct for signing Net Worth Certificate without doing Real Audit The Institute of Chartered Accountants of India in the matter of Shri T. Rajah Balaji vs. CA. Prakash Pesala has held CA guilty of Misconduct for signing BS and P&L without doing Real Audit. The Disciplinary Committee was of the opinion that CA. Prakash Pesala (M. No. 200805) was GUILTY under professional misconduct falling within the meaning of Items (7) & (8) of Part I of Second Schedule to the Chartered Accountants Act, 1949 with respect to the allegation that the Respondent had issued a Net-worth

I. T. MIRROR (2023-24) certificate (C-33) dated 30.04.2012 to Shri K Srinivas Kalyan Rao certifying his net worth as on 31.03.2012 at Rs. 2,60,21,62,333/(Rs.260.21Crore) which was incorrect and contained inflated figures as the said Networth was certified based on the huge investment in shares of the Company but subject shares were not actually transferred in the name of Shri K. Kalyan Srinivas Rao on the date of the said certificate. It was noted that the said complaint was based on a case registered with CBI against Sh. Kalyan Rao, the Managing Director of M/s. Best Crompton Engineering Projects ltd. (hereinafter referred to as the 'Company') on the basis of complaint made by the Assistant General Manager, Central Bank of India, Corporate Finance Branch, Chennai (hereinafter referred to as the 'Bank') regarding fraud committed to the tune of Rs.133.31 Crores. It was stated that in pursuance of the said criminal conspiracy, the Managing Director induced and cheated the bank to sanction them various credit limits such as Cash credit, Bank Guarantee and letter of credit along with adhoc/enhanced limits from 2010 to 2013 and due to non-repayment, the loan account became NPA on 28.05.2013 which caused wrongful loss of Rs.133.31 crore to the Bank. At the outset, with respect to objections reiterated by the Respondent relating to appearance of Director(Discipline) through authorized representative, it was noted that said objection was addressed in detail in the Findings Report, hence, the hearing held was in line with the provisions of CA Rules, 2007. In context of merits of the matter, the Committee noted that out of total net worth of Rs. 260.21 crore certified, the investment in shares amounted Rs. 255.88 crores, thus latter constituted substantial portion of the networth certified. Further, it is evident that the alleged shares were not transferred in the name of his client as on 31.03.2012. It is noted that net worth represents the excess of assets over liabilities and that an asset is a resource that should be under the control of the individual due to past transaction. It is noted that in extant case, the fact that shares were, yet to be transferred signify that the shares were not in his control. Further, it was noted that the Respondent issued the alleged certificate considering his client owning shares without confirming the same either from the share certificates or any endorsed, share folio. With respect to the argument that shares were reduced from the net worth certificate of two individuals and added to that of Mr. Rao, it is noted that net worth could not be determined based on understanding among the individuals through adjustments to their net worth certificates or through sale deeds. The Respondent could produce no evidence to show that the consideration in lieu of these shares was transferred which is of crucial relevance as no liability for purchase of the shares figured in the net worth certificate. Hence, it is incomprehensive to understand the basis on which the Respondent was convinced that Mr. Rao was the owner of the shares, other than an informal understanding among individuals. Moreover, when the Respondent had omitted to mention the fact of shares were yet to be transferred and included the said shares in the determination of net worth, it resulted in the inflation of Net-worth of Mr. Rao by Rs.255.88 crores (total Net worth Rs.260 crores) in the said certificate so issued by the Respondent. It is further noted that issuing the generic certificate by using title “To Whom So Ever It May Concern” on the alleged Net-worth Certificate by the Respondent added to misconduct on the part of the Respondent as it gave an opportunity to the Company to submit the same to the Bank. Thus, it is viewed that when a professional issues a certificate, he is responsible for the factual accuracy of what is stated therein. In fact, his examination of the records should be intense at the time of issuing certificate than that issuing audit report. However, in view of the incomplete verification done by the Respondent and absence of disclaimer relating to legal ownership of the shares reflected in the said certificate which the Respondent was required to state in the said certificate, it is viewed that he had not performed his professional duties diligently. The Committee thus viewed that the misconduct on the part of the Respondent has been held and established within the meaning of Item (7) and (8) of Part I of Second Schedule to the CA Act, 1949 and keeping in view 8

I. T. MIRROR (2023-24) the facts and circumstances of the case as aforesaid, ordered that the name of the Respondent CA. Prakash Pesala (M. No. 200805) be removed for a period of 3 (Three) months from the Register of members along with a fine of Rs. 25,000/- (Rupees Twenty Five Thousand Only) be levied upon him that shall be payable within a period of 3 (Three) months from the date of receipt of the Order and in case he failed to pay the same as stipulated, the name of the Respondent be removed from the Register of members for a further period of 1 (One) month as per the order of the Committee. 5. NFRA holds superior and overriding powers over the ICAI On 5-12-2023 : The National Company Law Appellate Tribunal (“NCLAT”), Delhi Bench comprising of Justice Rakesh Kumar Jain (Judicial Member) and Mr NareshSalecha (Technical Member) has dismissed an appeal and upheld the penalty imposed by the National Financial Reporting Authority (“NFRA/Respondent”) on the auditors of Dewan Housing Finance Corporation Ltd (“DHFL”). The ruling confirms that NFRA has the right to issue a penalty retrospectively when there is misconduct. NCLAT further clarified that NFRA holds superior and overriding powers over the Institute of Chartered Accountants of India (“ICAI”) in cases related to the professional misconduct of Chartered Accountants. The National Company Law Appellate Tribunal reaffirmed the penalty levied by the National Financial Reporting Authority on auditors of Dewan Housing Finance Corporation Ltd (DHFL), ruling that NFRA was well within its rights to issue a penalty in the case of misconduct retrospectively. 9

Understanding the nuances of tax laws is imperative for businesses and professionals to ensure compliance and navigate financial transactions effectively. Among the pivotal sections of the Income Tax Act, Section 41 holds particular significance as it addresses the taxation intricacies related to allowances, deductions, and various financial transactions. In this comprehensive article, we will explore the provisions of Section 41(1), Section 41(2), Section 41(3), Section 41(4), Section 41(5), and Section 41(6) directly from the Bare Act. By shedding light on the implications and intricacies of each subsection, we aim to provide clarity on the application of Section 41 in the realm of income taxation. SECTION 41(1) - TAXATION OF ALLOWANCES AND DEDUCTIONS Section 41(1) of the Income Tax Act pertains to the treatment of allowances or deductions claimed by an assessee in a previous assessment year concerning losses, expenditures, or trading liabilities. The section outlines two scenarios that may trigger the taxation of such allowances or deductions. Clause (a) : Remission orCessation by the Original Assessee If the original assessee (referred to as the first-mentioned person) has claimed an allowance or deduction for a loss, expenditure, or trading liability, and subsequently, during any previous year, the first-mentioned person obtains any amount in cash or otherwise, or some benefit due to the remission or cessation of such loss, expenditure, or trading liability, that amount or the value of the benefit is deemed as profits and gains of the business or profession. This deemed income is chargeable to income tax in the relevant previous year, irrespective of whether the business or profession is still in existence. Example :- Original Assessee: Mr. Anand (Year 1) Ÿ Mr. Anand (A) operates a business and claims a deduction of Rs.5,00,000 for a trading liability in Year 1. Ÿ In Year 2, due to negotiations, the liability is remitted, and Mr. Anand receives Rs.4,00,000 in cash. Ÿ The remission of the liability results in a taxable income of Rs.4,00,000 for Mr. Anand in Year 2. Clause (b) :Successor in Business In the event of a successor in business obtaining an amount or benefit, in cash or otherwise, related to a loss, expenditure, or trading liability for which the first-mentioned person claimed an allowance or deduction (as described in Clause (a)), the amount or value of the benefit is treated as profits and gains of the business or profession of the successor. This income is chargeable to income tax in the previous year in which the successor receives the amount or benefit. Example :- Original Assessee: Ms. Bharti (Year 1) Successor in Business: Mr. Chetan (Year 2) Ÿ Ms. Bharti (B) claims a deduction of Rs.3,00,000 for a loss in Year 1. Ÿ In Year 2, Mr. Chetan takes over the business from Ms. Bharti. He receives a benefit related to the loss claimed by Ms. Bharti, amounting to Rs.2,00,000. Strategic Insights into Section 41: with easy to understand examples - CA DIPAK C. DAMA 10

I. T. MIRROR (2023-24) 11 Ÿ The benefit received by Mr. Chetan is considered taxable income for the business in Year 2. EXPLANATIONS: Explanation 1 to section 41(1) :Writing Off Liabilities The term "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof" includes the remission or cessation of any liability through a unilateral act, such as writing off the liability in the accounts of either the first-mentioned person (under Clause (a)) or the successor in business (under Clause (b)). Example : Original Assessee: Company Xyz (Year 1) Successor in Business: Company Abc (Year 2) Ÿ Company Xyz (X) writes off a trading liability of Rs.10,00,000 in Year 1. Ÿ In Year 2, Company Abc (A), the successor, receives a benefit due to the earlier write-off, amounting to Rs.8,00,000. Ÿ The benefit received by Company Abc is considered taxable income for the business in Year 2. Explanation 2 to section 41(1) : Successor in Business Defined): Ÿ The term "successor in business" is defined to cover various scenarios: Ÿ Amalgamation: In the case of an amalgamation of a company with another, the amalgamated company is considered the successor. Ÿ Individual or Entity Succession: If the first-mentioned person is succeeded by another person, firm, or resulting company in that business or profession, the succeeding entity is deemed the successor in business. Example : - Original Assessee: Mr. Das (Year 1) “ Successor in Business (Amalgamation): XYZ Ltd. (Year 2) “ Ÿ Mr. Das (D) claims a deduction of Rs.8,00,000 for a loss in Year 1. Ÿ In Year 2, XYZ Ltd. and Mr. Das's company undergo amalgamation, forming a new entity. XYZ Ltd. is the amalgamated company. Ÿ As a result of the amalgamation, XYZ Ltd. succeeds to the business and profession of Mr. Das. Ÿ Any amount or benefit received by XYZ Ltd. related to the loss claimed by Mr. Das is considered profits and gains of the business or profession of XYZ Ltd. Ÿ The amount or value of the benefit received by XYZ Ltd. is taxable income for XYZ Ltd. in the previous year in which the successor (XYZ Ltd.) receives the amount or benefit. This section ensures that any financial gain arising from the remission or cessation of liabilities, for which tax benefits were previously claimed, is brought into the tax ambit either for the original assessee or the successor in business. SECTION 41(2) - TAXATION OF EXCESS MONEY FROM ASSET TRANSACTIONS: Section 41(2) of the Income Tax Act deals with the taxation of excess money received from the sale, discard, demolition, or destruction of certain assets owned by the assessee and used for business purposes. This section is particularly relevant when the proceeds from such transactions exceed the written down value of the assets. Key Points: 1. Assets Covered: • The section applies to buildings, machinery, plants, or furniture that meet the following criteria:

I. T. MIRROR (2023-24) • Owned by the assessee. • Depreciation has been claimed under clause (i) of sub-section (1) of section 32. • Used for the purposes of business. 2. Transactions Covered: • The excess money arising from the sale, discard, demolition, or destruction of these assets, along with any scrap value, if applicable, is subject to taxation. 3. Taxable Amount Calculation: • The taxable amount is determined by comparing the moneys payable (proceeds) with the written down value of the asset. If the proceeds, along with any scrap value, exceed the written down value, the excess is considered income and chargeable to income tax. 4. Limitation on Taxable Amount: • The taxable amount is capped at the difference between the actual cost and the written down value. Only the portion of the excess that does not exceed this limit is chargeable to income tax. 5. Timing of Taxation: • The taxable amount is included as income of the business in the previous year in which the moneys payable for the asset become due. This ensures that the tax liability aligns with the financial events related to the asset. 6. Explanation Regarding Business Existence: • The explanation clarifies that if the moneys payable become due in a previous year when the business for which the asset was used is no longer in existence, the provisions of this sub-section still apply. In such cases, the section operates as if the business is in existence in that previous year. Note: Section 41(2A) has been omitted in the provided text. In essence, Section 41(2) aims to tax the excess proceeds from the disposal of certain business assets, preventing the assessee from benefiting disproportionately when the realized amount exceeds the written down value of the asset. The inclusion of such excess proceeds as business income ensures a fair tax treatment in alignment with the financial activities of the business. Example : Assessee: Mr. Arjun (Year 1) “ Business: Arjun Enterprises Scenario: Sale of Machinery ’’ 1. Assets Covered: • Arjun Enterprises owns machinery used for manufacturing products, and depreciation has been claimed under clause (i) of sub-section (1) of section 32. • The machinery is a crucial part of the business operations. 2. Transaction: • In Year 1, Arjun Enterprises decides to upgrade its machinery and sells the existing machinery for Rs.15,00,000. 3. Taxable Amount Calculation: • The written down value of the machinery is Rs.8,00,000. • The proceeds from the sale are Rs.15,00,000, and there is no scrap value. • The excess amount subject to taxation is Rs.7,00,000 (Rs.15,00,000 - Rs.8,00,000). 4. Limitation on Taxable Amount: • As per the limitation, only the portion of the excess not exceeding the difference between the actual cost and the written down value is taxable. 12

I. T. MIRROR (2023-24) • Let's assume the actual cost of the machinery is Rs.12,00,000. • The taxable amount is limited to Rs.4,00,000 (Rs.12,00,000 - Rs.8,00,000). 5. Timing of Taxation: • The taxable amount of Rs.4,00,000 is included as income of Arjun Enterprises in Year 1, the previous year in which the moneys payable for the machinery become due. 6. Explanation Regarding Business Existence: • In a hypothetical situation where Arjun Enterprises ceases to exist as a business in Year 1, the provisions of Section 41(2) still apply. The taxable amount of Rs.4,00,000 is considered income as if the business is in existence in that previous year. SECTION 41(3) - TAXATION OF SURPLUS FROM SCIENTIFIC RESEARCH ASSET SALE: Overview : Section 41(3) of the Income Tax Act addresses scenarios in which a business or profession sells an asset originally acquired for scientific research purposes under specific clauses of Section 35. This provision comes into play when the asset is sold exclusively for scientific research and not utilized for other purposes. Taxable Income Calculation: If the proceeds from the sale, combined with total deductions claimed under Section 35, surpass the original capital expenditure on the asset, the surplus amount (or total deductions, whichever is lower) is deemed taxable income. This taxable income is attributed to the business or profession, and the tax liability arises in the fiscal year when the sale occurs. Explanation Clause: Furthermore, the section provides clarification. If the money payable for the asset becomes due in a year when the business no longer exists, Section 41(3) still applies. In such cases, any outstanding payments related to the sale of the asset are subject to taxation as if the business were still operational during that particular year. In essence, Section 41(3) ensures that the tax implications of selling assets for scientific research extend even to years when the business is no longer in existence. Example : Assessee: Dr. Ananya (Year 1) Business/Profession: Ananya Labs “ Scenario: Sale of Scientific Research Equipment “ 1. Asset Acquisition for Scientific Research: • In Year 1, Ananya Labs, engaged in scientific research, acquires specialized equipment for Rs.20,00,000 under the provisions of Section 35. 2. Exclusive Use for Scientific Research: • Ananya Labs utilizes the equipment exclusively for scientific research purposes, in accordance with the conditions specified in Section 35. 3. Sale of the Asset: • In Year 5, with advancements in technology, Ananya Labs decides to upgrade its equipment and sells the originally acquired asset for Rs.25,00,000. 4. Total Deductions under Section 35: • Ananya Labs has claimed total deductions of Rs.15,00,000 under Section 35 for the scientific research conducted using the equipment. 5. Taxable Income Calculation: • The original capital expenditure on the asset was Rs.20,00,000. 13

I. T. MIRROR (2023-24) • The surplus amount from the sale is Rs.5,00,000 (Rs.25,00,000 - Rs.20,00,000). • The total deductions claimed under Section 35 are Rs.15,00,000. • The taxable income under Section 41(3) is the lower of the surplus amount and the total deductions, which is Rs.5,00,000. 6. Timing of Taxation: • The taxable income of Rs.5,00,000 is attributed to Ananya Labs in the fiscal year when the sale occurs (Year 5). 7. Explanation Regarding Business Existence: • Even if Ananya Labs ceases to exist as a business in Year 5, Section 41(3) still applies. Any money payable for the asset, if it becomes due in that year, is subject to taxation as if Ananya Labs were still operational during that particular year. SECTION 41(4) - TREATMENT OF RECOVERED BAD DEBTS: Overview: - Section 41(4) of the Income Tax Act pertains to the recovery of bad debts for which a deduction has been previously allowed under clause (vii) of sub-section (1) of section 36. If the amount recovered on such debt exceeds the difference between the originally allowed deduction and the debt amount, the surplus is considered taxable profits and gains of the business or profession. This excess amount is subject to income tax in the fiscal year in which the recovery takes place, regardless of whether the business or profession is still in operation during that year. Explanation: For clarity, the section provides explanations: 1. Moneys Payable: • "Moneys payable" includes not only the actual price for which a building, machinery, plant, or furniture is sold but also any insurance, salvage, or compensation moneys payable in respect thereof. • In the case of the sale of a motor car, if its actual cost is considered as twenty-five thousand rupees according to the proviso to clause (1) of section 43, the moneys payable are calculated proportionally to the selling price, insurance, salvage, or compensation moneys, with respect to the actual cost before applying the said proviso. 2. Sold (Transfer): • The term "sold" encompasses not only a straightforward sale but also a transfer through exchange or a compulsory acquisition under existing laws. However, it excludes a transfer in a scheme of amalgamation, where an amalgamating company transfers an asset to the amalgamated company, provided the latter is an Indian company. Additional Provision (4A): In addition to the main clause, Section 41(4A) addresses the withdrawal of amounts from a special reserve created and maintained under clause (viii) of sub-section (1) of section 36. Any amount withdrawn from this special reserve is treated as profits and gains of business or profession, and it becomes liable for income tax in the year of withdrawal. If such a withdrawal occurs in a year when the business no longer exists, the provisions of this subsection apply as if the business were still in existence during that previous year. Example : - Assessee: Mr. Rahul (Year 1) Business: Rahul Traders Scenario 1: Recovery of Bad Debts (Section 41(4)): 1. Bad Debts Deduction: • In Year 1, Rahul Traders faces financial difficulties, and Mr. Rahul claims a deduction of Rs.5,00,000 for bad 14

I. T. MIRROR (2023-24) debts under clause (vii) of sub-section (1) of section 36. 2. Recovery of Bad Debts: • In Year 5, the financial situation improves, and Rahul Traders successfully recovers Rs.7,00,000 from the previously written-off bad debts. 3. Taxable Income Calculation: • The originally allowed deduction for bad debts was Rs.5,00,000. • The excess amount recovered is Rs.2,00,000 (Rs.7,00,000 - Rs.5,00,000). • The taxable income under Section 41(4) is Rs.2,00,000 in the fiscal year of recovery (Year Scenario 2: Withdrawal from Special Reserve (Section 41(4A)): 1. Creation of Special Reserve: • In Year 2, Rahul Traders creates a special reserve of Rs.3,00,000 under clause (viii) of sub-section (1) of section 36. 2. Withdrawal from Special Reserve: • In Year 6, Rahul Traders faces a cash crunch and decides to withdraw Rs.2,00,000 from the special reserve. 3. Taxable Income Calculation: • The withdrawal amount from the special reserve is Rs.2,00,000. • The taxable income under Section 41(4A) is Rs.2,00,000 in the fiscal year of withdrawal (Year 6). 4. Business No Longer Exists: • Even if Rahul Traders ceases to exist in Year 6, the provisions of Section 41(4A) still apply. The withdrawal of Rs.2,00,000 is subject to taxation as if the business were still in existence during that previous year. SECTION 41(5) - SET-OFF OF LOSSES FROM A DISSOLVED BUSINESS: Overview: This provision addresses situations where a business or profession, to which Section 41 applies, no longer exists. If there is income subject to taxation under sub-sections (1), (3), (4), or (4A) in connection with that terminated business or profession, any losses incurred during the year in which it ceased to exist may be set off against the income taxable under the mentioned sub-sections. Explanation: When a business or profession comes to an end and there is taxable income under specific sub-sections of Section 41, any losses from that business during the year of its cessation can be used to offset the taxable income. This applies unless the losses are related to speculative business. Example : - Assessee: Ms. Aishwarya (Year 1) Business: Aishwarya Textiles Scenario: Dissolution of Aishwarya Textiles 1. Operational Years: • Aishwarya Textiles operates profitably for several years, contributing to the textile industry. 2. Financial Downturn: • In Year 5, due to market changes and increased competition, Aishwarya Textiles faces financial challenges. 3. Decision to Dissolve: • In Year 6, recognizing the inability to sustain operations profitably, Aishwarya decides to dissolve the textile business. 15

I. T. MIRROR (2023-24) 4. Taxable Income under Section 41(3): • Before dissolution, Aishwarya Textiles sells machinery originally acquired for scientific research, resulting in taxable income under Section 41(3). 5. Set-off of Losses: • Aishwarya Textiles incurs losses of Rs.10,00,000 during the year of its dissolution (Year 6). 6. Taxable Income Calculation: • The taxable income under Section 41(3) is Rs.8,00,000. • Section 41(5) allows the set-off of losses against taxable income. • The losses incurred in Year 6 can be set off against the taxable income, resulting in a net taxable income of Rs.0. 7. Speculative Business Exception: • If the losses were related to speculative business, Section 41(5) wouldn't allow the set-off. 8. Business No Longer Exists: • After utilizing the set-off provision, Aishwarya Textiles officially ceases to exist. CONCLUSION: In conclusion, Section 41 of the Income Tax Act emerges as a crucial component that intricately governs the taxation landscape for businesses and professionals. Through a meticulous examination of its various subsections, including Section 41(1) to Section 41(5), we've unraveled the complexities surrounding allowances, deductions, and financial transactions. Real-world examples have served as guiding illustrations, providing a practical understanding of how these provisions come into play. As businesses strive for financial prudence and compliance, a nuanced comprehension of Section 41 becomes indispensable. This exploration has aimed to demystify the provisions, offering insights that empower individuals and entities to navigate the tax landscape with clarity and confidence. 16

From A.Y.2024-25 onwards New Regime u/s 115BAC(1A) shall be the default Tax Regime for Filing Income Tax Return for Individuals, HUF, Association of Persons (AOP) (other than a Co-operative Society), Body of Individuals (BOI) and Artificial Juridical Person (AJP) and to opt for old regime tax payer have to follow specified procedure. Section 115BAC is totally changed from AY 2024-25 and these changes are explained below: ITR Filing options Till A.Y. 2023-24 and A.Y. 2024-25 onwards - CA MAYUR J SONDAGAR 17 Particulars Up to A.Y.2023-24 A.Y.2024-25 onwards Excess Liability paid in earlier tax periods in FORM GSTR-3B Default Regime New Regime Section 115BAC Old 115BAC was Applicable to Individual and HUF only Applicability Relevance of Due Date u/s 139(1) Person NOT having income from business or profession Person having income from business or profession

I. T. MIRROR (2023-24) Particulars Up to A.Y.2023-24 A.Y.2024-25 onwards What if Due Date u/s 139(1) is missed 18

A. INTRODUCTION Benami transactions, deeply entrenched in India's history and modern economic offenses, have raised longstanding concerns. The term "Benami" translating to "without name" or "no name", encapsulates transactions where property is held in one person's name, concealing the actual owner who provides the consideration.In India, as a practice, there is a long-drawn history of people buying and holding property in someone else's name, even though there is no intention to benefit the person in whose name the transaction is made. This type of transaction has been judicially referred to as Benami transaction as the real title is divorced from the ostensible title and they are vested in different persons. The law on Benami in India is ever evolving and has changed drastically over time. Interestingly, initially there was no law at all either to regulate or prohibit the entering into Benami Transaction, but the process of revamping of the law has taken its due course and the law applicable at present is the one which was enacted in the year 1988 but was completely overhauled in the year 2016, with strict penalties and punishments in place for any violation of the provisions of the Act. While mainly these benami transactions are done for immovable assets like land and building but it can also be done for movable assets like cash, shares, bonds, etc. Shares of companies are often purchased or applied for and allotted in the names of persons other than the real owner who furnishes the consideration. The people put the name of their wife and children to get exemption from tax and finally converting into black money. The individuals as well as corporates were using opaque structures to build huge land banks as well as to outfits in states where locals have been used as fronts to buy properties to circumvent state laws. As tax rates kept heading north and new taxes (wealth tax, gift tax) were introduced, benami transactions increased. It also became a route for big-ticket bribes. Benami property was also used to dodge creditors and reduce personal liability. The Benami Transactions (Prohibition) Act, 1988 (“BTPA”) came into existence due to the above referred factors. BTPA didn't have any system or procedure of seizure/obtaining of the benami property and along these lines, no benami property could be procured by the administration. The Benami Transactions (Prohibition) Amendment Act, 2016is an extensive law which has enlarged the ambit of benami transactions and is a landmark legislation aimed at combating the widespread practice of benami transactions. B. EVOLUTION OF BENAMI LAW IN INDIA The stepwise evolution of benami laws is outlined to illustrate key stages in its development. Ÿ The Code of Civil Procedure and the Income Tax Act had provisions to discourage dishonest benami transactions.Realising these were not effective, a select committee of parliament studying the Taxation laws (Amendment) Bill, 1969 recommended that the Government should examine existing laws on benami transactions and see if they could be banned.A similar point was made during the debate in Parliament on the Taxation Laws (Amendment) Bill, 1971. Ÿ In December 1972, the then Law, Justice and Company affairs minister requested the Law Commission of India to look at ways in which benami deals could be stopped. Benami Law- Evolving jurisprudence & stinging impact of the law with special focus on loan transactions 19 SRISHTI ANUMOD CA HARIT DHARIWAL

I. T. MIRROR (2023-24) Ÿ The Law Commission suggested a separate law on benami transactions with the following provisions: o The real owner could not file a suit against the benamidar to reclaim the property. o The real owner could have no defence based on any right related to the Benami property. o HUFs and Trusts were exempted o Certain sections of the Indian Trusts Act, Code of Civil Procedure and the Income – Tax Act would be repealed. Ÿ In May 1988, the Government issued an ordinance, Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, which was then enacted as the Benami Transactions (Prohibition) Act. It came into force on 19thMay, 1988. Ÿ The Act defined benami transactions, prohibited them and made them punishable with a jail term and fine. It also prohibited the recovery of property from the benamidar by the real owner and the properties were also liable to be confiscated. Ÿ However, the Act had many infirmities relating to procedural issues, which made it practically useless. Ÿ Benami Transactions (Prohibition) Bill was introduced in 2011to replace the 1988 Act, but it lapsed with the dissolution of the Fifteenth Lok Sabha. Ÿ The new Government introduced the Benami Transactions (Prohibition) Amendment Bill, 2015. o Introduced in the Lok Sabha – 13thMay, 2015 o Referred to Standing Committee – 15thMay, 2015 o Committee submitted its report – 28thApril, 2016 o Amendments made in Bill o Passed in the Lok Sabha – 17thJuly, 2016 o Passed in the Rajya Sabha – 2ndAugust, 2016 o Received assent of the President - 10thAugust, 2016 o Benami Transactions (Prohibition) Amendment Act, 2016 (BTP Amendment Act) – Notified to come into effect on 1st November 2016 vide notification dated 25th October,2016 The Benami Transactions (Prohibition) Amendment Act, 2016, introduced major changes, including: Ÿ The Act was renamed as Prohibition of Benami Property Transactions Act, 1988, (“PBPTA”) – expanded to 72 sections from earlier 9 sections Ÿ Defined various aspects of Benami transactions, provided exceptions and outlined procedures for confiscation. Ÿ Provisions for attachment of benami property before adjudication. Ÿ Rules and procedures for adjudication along with strict timelines. Ÿ Enlarging the scope of benami transactions along with increased penalties. Ÿ Creation of the Benami Prohibition Unit (BPU) for investigation and enforcement. C. KEY PROVISIONS & LEGAL FRAMEWORK PBPTA is a crucial legislation in India aimed at curbing the practice of benami transactions. An analysis of its pivotal provisions and the underlying legal framework is given below: Benami transaction [Section 2 (9) of PBPTA] A. a transaction or an arrangement-- a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and 20

I. T. MIRROR (2023-24) 21 b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration, except when the property is held by-- i. a Karta, or a member of a HUF, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out of the known sources of HUF; ii. a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company and any other person as may be notified by the Central Government for this purpose; iii. any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual; iv. any person in the name of his brother or sister or lineal ascendant or descendant, where the names of brother or sister or lineal ascendant or descendant and the individual appear as jointowners in any document, and the consideration for such property has been provided or paid out of the known sources of the individual; or B. a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or C. a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; D. a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious; v Benamidar [Section 2(10) of PBPTA]: Benamidar means a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name. v Beneficial owner [Section 2(12) of PBPTA]: Beneficial owner means a person, whether his identity is known or not, for whose benefit the property is held by a benamidar. v Property [Section 2(26) of PBPTA] –Property means asset of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and included any right or interest of legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property. v Section 3(1) of PBPTA : No person shall enter into any benami transaction. The act prohibits all benami transactions, including purchase, sale, exchange, gift, or any other mode of transfer of property.This prohibits both direct and indirect benami transactions, where the true ownership is concealed. v Section 4 of PBPTA :Prohibition of the right to recover property held benami No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property. v Adjudication and Appellate Mechanism: The act provides for a dedicated adjudication mechanism (with proper rules notified too) to settle disputes related to benami transactions. v Section 53 of PBPTA: Offences & prosecution:Offenders, including the beneficial owner and those abetting such transactions, can face rigorous imprisonment ranging from one to seven years and fines up to twentyfive percent of the property's fair market value. v Section 54 of PBPTA: Penalty for false information:Providing false information or documents under this Act is a punishable offense, carrying a sentence of rigorous imprisonment ranging from six months to five years, along with a fine of up to ten percent of the property's fair market value.

I. T. MIRROR (2023-24) v Section 61: Not with standing anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under this Act shall be non-cognizable. PBPTA has been interpreted and applied in numerous court rulings, shaping its implementation and impact over the years. Two landmark cases under the Benami Act are presented below: v Union of India v. Ganpati Dealcom (P.) Ltd. [2022] 141 taxmann.com 389 (SC)- Highlighted the need for mens rea (criminal intent) in Benami transactions. Criminal prosecution could not be initiated for transaction entered into prior to coming into force of Benami Transactions (Prohibition) Amendment Act, 2016 as sections 3 and 5 of unamended Act which dealt with criminal prosecution were unconstitutional from their inception; 2016 Act could only be applied prospectively. v True test of Benami:In Bhim Singh v. Kan Singh AIR 1980 SC 727 the principles governing the determination of the question whether a transfer is a benami transaction or not, were summed up by the Supreme Court as under : a) the burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; b) If it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; c) the true character of the transaction is governed by the intention of the person who has contributed the purchase money, and d) the question as to what the intention was, has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct, etc. D. BENAMI LAW & LOAN TRANSACTIONS: Acontentious matter within benami law pertains to loan transactions, wherein individuals borrow funds to acquire a property in their own name. The determination of whether such transactions qualify as benami hinges on the specific details and intentions of the parties involved. The nuanced assessment of each case is essential to ascertain the legitimacy of the arrangement and whether the lender can assert ownership of the property. The Supreme Court of India has laid down some principles and tests to determine the nature of loan transactions in relation to benami law. Some of these are: 1) the source from which the purchase money came; 2) the nature and possession of the property, after the purchase; 3) motive, if any, for giving the transaction a benami colour; 4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; 5) the custody of the title deeds after the sale; and 6) the conduct of the parties concerned in dealing with the property after the sale. In the case of Initiating Officer versus M/s Deja Vu Farms Pvt. Ltd. (“DVF”) and Shah Rukh Khan, the company DVF purchased agricultural land using the agriculturist status of its director, with permission granted by the additional collector. Shah Rukh Khan (who was a shareholder of DVF) extended an unsecured loan to DVF, which was utilized to acquire the agricultural property. The Initiating Officer deemed DVF as the Benamidar and Shah Rukh Khan as the Beneficial Owner, citing DVF's incorporation on SRK's instruction and the property purchase using funds from an unsecured loan provided by SRK in his capacity as a shareholder. The Adjudicating Authority, however, agreed with the contentions of the DVF and rejected the Reference of the Initiating Officer and released the Attachment Order passed by the Initiating Order on the following grounds: a) Property purchased is in name of DVF. 22

I. T. MIRROR (2023-24) 23 b) Amount paid by SRK is unsecured loan in capacity of shareholder and this is also allowed as per the company law. c) Registered deed is in name of DVF. d) Amount paid by SRK as unsecured loan is reflected in annual accounts. The Authority said that it was "beyond doubt" that the property was acquired and held by the company in its own right and independent of any other person.There is nothing to raise the inference or presumption in law that the property owned by a company can be said to be held for the benefit of its shareholder. Thus, a commercial transaction entered into course of business by an independent entity M/S Deja Vu Farms Pvt. Ltd. cannot be colored as a benami transaction. However, an appeal has been filed by the Initiating Officer before the Appellate Tribunal contesting the aforesaid order passed by the Adjudicating Authority. Law always presumes that the name of the person which is found in the document is taken to be the owner of the property that is dealt with under the document. The plea of benami is an exception to this rule and hence heavy burden lies on the person who pleads that the recorded owner is a benami holder. One cannot assume a benami transaction through mere conjectures or surmises and it can never be a substitute for the proof which rests on the shoulder of the person who asserts that the transaction is a benami transaction. CASE STUDY: In a case study involving a housewife (having a nominal income source) acquiring properties with her husband's assistance and unsecured loans from a known money lender, the potential treatment of this arrangement as benami by the department would raise critical considerations. Ÿ The question hinges on whether the department could designate the “known” money lender as the beneficial owner and the wife as the benamidar? Ÿ Is the existence of a written loan agreement mandated in determining the legitimacy of financial transactions? Could the absence of such a document impact the evaluation of the arrangement under benami considerations? Ÿ To what extent is it generally expected that a housewife (with no practical dealings) should possess comprehensive knowledge about the exact details of properties acquired through unsecured loans facilitated by her husband and a known money lender, especially when evaluating the potential classification of such transactions under benami considerations? The housewife's lack of familiarity with local property laws and the real estate market leads her to delegate property transactions to her husband, a common practice where male family members handle transactions while females actively participate in document execution. The arrangement reflects traditional gender roles and the division of responsibilities within the family.If the wife is aware of her husband's involvement in property transactions on her behalf and there are well-documented records, including purchase and sale deeds and loan confirmations along with proper disclosures in books of accounts and income tax filings, it demonstrates that these are regular practices rather than isolated incidents. In informal lending arrangements, particularly between private lenders and individuals, the absence of a formal loan agreement or security is common. These practices rely heavily on trust, personal relationships, and mutual understanding between the lender and borrower. Verbal agreements or agreements based on mutual understanding often replace written contracts and collateral is typically not required. Informal lending, grounded in trust and relationships, provides quick access to funds, particularly when traditional banking avenues may be challenging to access. The lack of formal security for such loans aligns with established norms in informal lending practices. The understanding that merely knowing the money lender does not classify a transaction as benami is crucial, as the term refers to property ownership by one person with consideration belonging to another, involving undisclosed or fictitious funds. In the case of the housewife acquiring properties, the funds were sourced through disclosed borrowings from the money lender and others, documented in her accounts and returns. The transaction, being part of legitimate commercial activities, sourced funds transparently and cannot be labelled as benami.

I. T. MIRROR (2023-24) Commercial transactions which are completely transparent by duly following the requisite formalities should not be camouflaged with the term benami merely due to the fact that a particular property has been acquired through borrowed funds.For instance, In case of home loans, disbursement is made by lender issuing DD or cheque in the name of the seller of the property and debiting the account of the buyer-borrower in whose name the property is registered. Here since consideration is provided by a person other than the person in whose name property is registered, will it a benami transaction? It is not a benami transaction as the lender is not a beneficial owner of the property. The buyer-borrower is not holding it "for the immediate or future benefit, direct or indirect," of the lender. There is no intention that lender will be real owner while borrower will be the on-record owner. Lender is only interested in repayment of loan and has limited interest in the property as security till the loan is repaid. It is essentially the test of beneficial interest which is to be established stringently along with other surrounding circumstances. The principle which we need to highlight is that merely financial assistance per se would not lead the transaction to be called as benami but certain other tests like any beneficial ownership, concealing one's black money by routing into properties held in other person's name, the motive for giving a benami colour, etc. are to be duly considered to capture such transactions under the net of the Prohibition of Benami Property Transactions Act, 1988. E. BENAMI LAW: NAVIGATING IMPACT & FUTURE CHALLENGES PBPTA has had a significant impact on India's financial landscape by curbing benami transactions and promoting transparency. The implementation of the amended Act has led to: a. Increased tax collection b. Deterrence against financial crime c. Streamlining & greater transparency in property transactions d. Reduced corruption &improved corporate governance Recent government actions against benami transactions have intensified, with significant cases such as the Income Tax raids on Congress MP Dhiraj Sahu's properties in December 2023, the Enforcement Directorate' seizure of 15 properties linked to A. Raja, former Union Minister in October 2023, the Income Tax Department's operations on Bangalore-based Credit Cooperative Societies in December 2021, as well as attaching benami assets of V K Sasikala and summoning Robert Vadra for questioning in 2019. These actions underscore the government's proactive stance in curbing benami activities and sending a clear message to potential offenders. Technological advancements, particularly through data analytics and artificial intelligence, have significantly enhanced benami detection efforts. By analysing vast datasets (including bank statements, property records, and investment portfolios), these tools can uncover unusual financial flows, expose hidden ownership networks and detect inconsistencies, providing authorities with valuable insights. Impact of Artificial Intelligence on benami detection is profound, as algorithms trained on labelled datasets enable automated anomaly detection, scanning financial data for suspicious transactions and alerting authorities. Moreover, AI facilitates predictive analysis, anticipating future benami transactions based on historical data, enabling proactive intervention. The enhanced investigation efficiency of AI aids in prioritizing cases, identifying key leads, and analysing complex financial data, optimizing investigators' time for strategic tasks in the fight against benami transactions.However, challenges such as effective implementation, a lengthy adjudication process and the need for increased public awareness pose hurdles to maximizing the impact of these technological advancements in combating benami transactions. Benami transactions remain a significant and enduring issue in India, marked by historical roots and contemporary economic implications. Legislative measures, exemplified by the Benami Transactions (Prohibition) Act and its 2016 amendment, have sought to curb these practices. Recent Supreme Court rulings have provided clarity on legal aspects, tackling concerns related to retrospective application and constitutional validity. Despite persistent challenges, the evolving legal framework reflects a concerted effort to combat tax evasion, money laundering, and fraudulent asset diversion. As the judiciary and legal experts grapple with complexities, finding a balance between rigorous enforcement and fairness is imperative in addressing the complexities of Benami transactions in India. 24

CA Certificate for ITC mismatch under Circular 183& 193 25 - CA SARADHA HARIHARAN

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I. T. MIRROR (2023-24) SL NO. INVOICE NUMBER DATE OF INVOICE TAXABLE VALUE IGST CGST SGST/ UTGST CESS TOTAL INVOICE VALUE REMARKS Restriction on Use 14 This certificate is issued for the purposes of verification of compliance of requirements in Section 16(2)(c) of CGST Act that the tax has been paid by the Supplier in respect of the supplies covered by the mismatched invoices, as required by the Proper Officer of above named Recipient for financial year ............... / ……………………. as required under Circular No. 183/15/2022-GST dated 27th December 2022 issued by CBIC. This certificate should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing. For XYZ and Co. Chartered Accountants Firm's Registration Number Place of Signature: Date: Signature (Name of the Member Signing the Certificate) (Designation) Membership Number:______________ UDIN ____________ CHECKPOINTS FOR CHARTERED ACCOUNTANTS - 1. The certificate is to be issued only for the following four categories of mismatches as listed in para 3 of the Circular: i. Where Supplier has not filed FORM GSTR-1 but has filed FORM GSTR-3B; ii. Where outward supply(ies) have been omitted from FORM GSTR-1 and FORM GSTR-3B has been filed; iii Where outward supply(ies) have been wrongly reported as 'B2C' supply in FORM GSTR-1 instead of 'B2B' supply and FORM GSTR-3B has been filed; iv. Where outward supply(ies) have been reported with 'incorrect GSTIN' under 'B2B' category in FORM GSTR-1 and FORM GSTR-3B has been filed. 2. The Circular provides that the certificate by a Chartered Accountant should be issued when amount of mismatched input tax credit exceeds Rs.5 lakh. This limit will be (i) Rs.5 lakh for IGST mismatch or (ii) Rs.2.5 lakh each of CGST and SGST/UTGST mismatch. 28

I. T. MIRROR (2023-24) 29 3. Considering that invoice-wise details are not available in return filed in FORM GSTR-3B, it is important to verify (i) tax invoices (ii) books and records and (iii) Annual Return in FORM GSTR-9 and Reconciliation Statement in FORM GSTR-9C to confirm the reliability of assertion made by the Supplier. Payment made only through returns in FORM GSTR-3B is to be considered for the purpose of this certificate. Payment made via FORM GST DRC-03 or through any other mode of recovery is beyond the scope of this certificate. 4. Verification must extend to review of multiple tax periods to identify output tax discharged in such subsequent tax period is not pertaining to any other liability. 5. Verification must start with the total mismatch informed by Recipient (as directed Proper Officer) and therefrom the scenarios that are outside the scope of this Circular (illustrated below) must be excluded to arrive at the extent of mismatch to be considered for certification. a) Amount of mismatch that is discharged other than via FORM GSTR-3B such as FORM GST DRC-03 or FORM DRC-13 or any other; b) Amount of mismatch that is resolved without being discharged via FORM GSTR-3B such as credit notes, return supplies etc. 6. Care must be taken to note: a) Tax period relating to the date of issue of tax invoice; b) Tax period in which outward supply is reported in FORM GSTR-1; c) Tax period in which output tax is discharged in FORM GSTR-3B; d) Consolidated data reported in FORM GSTR-1 and FORM GSTR- 3B and the annualized and final versions filed in annual return in FORM GSTR-9; e) Mismatch may not be limited to one of the four (4) categories discussed in this Circular.

Rule 88C- for difference in GSTR-1 vs 3B ( DRC-01B ) 1. Taxpayer shall be intimated of such difference in Part A of FORM GST DRC-01B 2. Taxpayer should do following action in 7 days from the date of issue of GST DRC01B Option-a) pay the amount of the differential tax, as specified in Part A of FORM GST DRC-01B, fully or partially, along with interest under section 50, through FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC01B or Option -b) furnish a reply, incorporating reasons in respect of that part of the differential tax liability that has remained unpaid, if any, in Part B of FORM GST DRC-01B 3. If he fails to pay and No reply furnished or when his reply is not satisfactory then recovery u/s 79 and he will not be able to file GSTR -1 of next period as per clause (d) of Rule 59(6) Recent Dangerous Changes in GST - Rule 88C and Rule 88D - CA HARSHIL SHETH DRC 01B No Brief Reasons for Difference Details (Mandatory) Some transactions of earlier tax period which could not be declared in the FORM GSTR-1/IFF of the said tax period but in respect of which tax has already been paid in FORM GSTR-3B of the said tax period and which have now been declared in FORM GSTR1/IFF of the tax period under consideration Any other reasons 1 2 3 4 5 30

I. T. MIRROR (2023-24) 31 Rule 88D- for difference in GSTR-2B ITC vs 3B ITC ( DRC-01C ) 1. Taxpayer shall be intimated of such difference in Part A of FORM GST DRC-01C 2. Taxpayer should do following action in 7 days from the date of issue of GST DRC-01C Option-a) pay the amount of the differential tax, as specified in Part A of FORM GST DRC-01C, fully or partially, along with interest under section 50, through FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC-01C or Option -b) furnish a reply, incorporating reasons in respect of the amount of excess input tax credit that has remained unpaid, if any, in Part B of FORM GST DRC-01C 3. If he fails to pay and No reply furnished or when his reply is not satisfactory then recovery u/s 73/74 and he will not be able to file GSTR -1 of next period as per clause (e) of Rule 59(6) DRC 01C No Brief Reasons for Difference Details (Mandatory) Input tax credit not availed in earlier tax period(s) due to non-receipt of inward supplies of goods or services in the said tax period (including in case of receipt of goods in installments). Input tax credit not availed in earlier tax period(s) inadvertently or due to mistake or omission Excess reversal of ITC in previous tax periods which is being reclaimed in the current tax period 1 2 3 4 5 6 7 8 9 Any other reasons (Please specify)

INTRODUCTION In the intricate dance between taxpayers and the tax authorities under the GST regime in India, the spotlight recently shifted to a dramatic deluge of Show Cause Notices (SCNs), akin to a wave crashing upon the shores of financial accountability, inundated businesses across the nation. These notices, like musical notes in a complex composition, demanded attention, requiring taxpayers to step into the limelight and explain the nuances of their financial performances. In September 2023, the government sent out a ton of notices to businesses, kind of like a flood of letters asking them to explain their finances& tax positions. These notices were serious and required businesses to come forward and talk. The idea of sending these notices is not new. It is a time-tested principle of natural justice (audialterampartem meaning 'let the other side be heard') and that no person can be adjudged guilty without being allowed to answer charges against such person. Now, let's talk about why this happened in September 2023. So, basically the government introduced a new computer system (IIT Big Data) to automatically generate these notices, and they went out like a storm to businesses all over the country. It felt like the officers weren't really paying attention and were blindly following this unique situation without looking at the actual discrepancies. THE MAY/SHALL DISPUTE U/S 73 OF THE CGST ACT, 2017 Section 73(1) devels into the determination of taxes unpaid, short-paid, refunds erroneously received, or input tax credit wrongly availed or utilized, excluding instances of fraud or willful misstatement or suppression of facts. In such cases, the Proper Officer is mandated to issue a notice to the concerned person, prompting them to explain why they shouldn't pay the specified amount, inclusive of interest under section 50 and a penalty as per the Act.Rule 142(1)(a) of the CGST Rules, 2017 supplements this by obliging the Proper Officer to electronically serve a summary in Form GSTDRC-01 alongside the notice issued under Section 73 of the CGSTAct, 2017. Asignificant twist in the narrative arises with Rule 142(1A), introduced through Notification No. 49/2019 on 9th Oct 2019. This rule initially mandated that the Proper Officer must communicate tax, interest, and penalty details ascertained before serving a notice under section 73(1) or section 74(1). However, a subsequent amendment via Notification No.79/2020 dated 15th Oct 2020 replaced the word "shall" with "may." The crux of the matter lies in the question of whether this change renders the rule optional or maintains its mandatory nature. The ambiguity arising from the shift in language adds a layer of complexity to the compliance landscape. THE LIMIT According to Section 73(2) of the CGST Act, 2017, the proper officer is mandated to issue a show cause notice (SCN) at least three months before the deadline specified in Section 73(10). As per Section 73(10), the proper officer must pass an order under subsection (9) of Section 73 within three years from the due date of filing the annual return for the relevant financial year or within three years from the date of an erroneously claimed refund, considering any representations. It is noteworthy that the due date for filing the annual return for FY2017-18 was extended to 5th and 7th February 2020, as outlined in Notification No. 06/2020-Central Tax. Consequently, based on the statutory provisions, the last date for issuing the order under Section 73(10) could have been 5th or 7th February 2023. IIT Big Data Unleashed: The Unprecedented Surge in GST Notices - CA YASH SHAH 32

I. T. MIRROR (2023-24) 33 However, a subsequent development altered this timeline. Through Notification No. 13/2022-Central Tax dated 5th July 2022, the time limit for issuing the order under Section 73(10) was further extended up to 30th September 2023. This extension grants additional time for due diligence, consideration of representations, and the fair adjudication of cases related to unpaid or short-paid taxes or wrongly availed or utilized input tax credits, aligning with the principles of procedural fairness and compliance within the GST framework. Further, CBIC, through powers conferred by Section 168A of the CGST Act, 2017, issued Notification No. 09/2023-Central Tax dated 31st March 2023 and extended the timelimit for issuance of Show Cause Notices and passing Orders under Section 73 of the CGST Act as under: Financial Year Revised Time Limit for Revised Time Limit for Issuance of Show Cause Notice Issuance of Order 2017-18 30th September 2023 31st December 2023 2018-19 31st December 2023 31st March 2024 2019-20 31st March 2023 30th June 2024 As these timelines were approaching fast department issued notices in haste, being in the final days of the extended time limit for notice issuance. These notices are issued without proper relied-upon documents or findings being communicated to the taxpayers and appear to be based on mere auto-populated numbers which may not be reliable in most notices. ISSUES Early on, technical issues on the GST portal posed obstacles for businesses and taxpayers, leading to complications in meeting tax obligations and errors in GST returns. Despite the government's assurance of leniency for genuine mistakes during the initial implementation, the Tax Department has initiated inquiries and issued numerous notices related to the financial year 2017-18. These notices span various issues, including alleged shortfalls, reversals of input tax credit due to form mismatches, and output GST liability. Notably, the challenges of this tax reform journey, where each notice unfolds like a chapter in a legal thriller, exploring the complexities faced by taxpayers in the evolving GST landscape. Some of the issues are as follows: Ÿ GSTR-9 Discrepancies: Notices are issued based on GSTR-9 filed for FY 2017-18, overlooking corrections made in GSTR-9/9C and DRC-03 filings. The oversight in considering rectifications raises concerns about the accuracy of the notices. The annual return is always considered as a change maker return or correction adopter return where taxpayer can go and file the annual return which is different from monthly returns and pay the appropriate differential duties along with interest to avoid the future risk of litigation. Even though that additional payment being made, still the department had not looked upon that and issued the notices carrying the difference again. Ÿ ASMTProceedings Oversight: In cases where ASMT 10 notices are issued, the response filed in ASMT 11 and the subsequent order in ASMT 12 are often disregarded. The lack of integration in considering filed responses and orders raises questions about procedural adherence. ASMT-12 is considered to be a closure to a particular deliberation on the issue being settled in terms of revenue as well as on the basis of submissions being made by the taxpayer, still after the issuance of such order, again notices have come in nature of non-compliance of provisions which is totally against the intention of the legislature to do so.

I. T. MIRROR (2023-24) Ÿ Incomplete ASMTProceedings: Notices are issued even when ASMT-10 notices receive replies in ASMT-11, but the proceedings are not concluded (ASMT-12 order pending). The issuance of notices without acknowledging ongoing proceedings under Section 61 of the CGST Act raises procedural concerns. The matters which are already in progress have been ignored and fresh starting of the proceeding have been initiated, duplicating the efforts at both the ends to suffer at the paucity of time which businesses usually face and complain about. Ÿ DRC-01 Challenges: DRC-01 notices, issued under Section 17(5) of CGST/SGST, exhibit shortcomings by not considering specific exclusions outlined in Section 17(5). Notices based solely on HSN codes in GSTR-2A, irrespective of taxpayer credit actions and irrespective of the nature of business of the taxpayer, highlight a lack of nuanced understanding. The ad hoc nature of reversals as canvased in the notices which are without at legal parameters in place, bringing on the nature of levy absenting the reason behind such reversal requirement, creates an atmosphere of distrust amongst the trade community, also the rules pertaining to reversals under Rule 42 & 43 seems weird and without any legal backing. Ÿ GSTR 3B vs. Table 8Aof GSTR 9 Discrepancies: Notices are consistently issued based on differences in ITC between GSTR 3B and Table 8A GSTR 9, disregarding the unavailability and inapplicability of GSTR 2A for FY 2017-18. Ignoring the conditions stipulated in Section 16(2) during this period raises concerns about the accuracy and fairness of the notices. The mechanism the match the credit as reflected by the vendor has come w.e.f 9th October 2019, still the government expects the taxpayer to match the same thing even for financial year 2017-18 without having that option available with the taxpayer, which shows the sheer intent of the government for wrong method & approach of collection of taxes. Ÿ No properOfficer: The notices which are being issued on the last dates of ending in a month which has put restrictions on the authority to generate fresh notice, have categorically been accepted by authorities to be generated and served by the system which has been developed by software companies. The board has vide various circulars – Circular 03/03/2017-GST dated 05th July 2017 & Circular 31/05/2018-GST dated 09th February 2018 which gives power to proper officers to issue notices under section 73 and 74 of the Act along with some monetary limits set out, which seems to be missing here, where notices are issued by system technology and has not been designated as proper officer. Ÿ Mode of delivery of Notices: The notices which are issued to the taxpayers, have always raised a controversy as to whether they are required to regularly visit the common portal to check whether they have been issued the notice or not, or whether it should get communicated with the media which is in place in terms of electronic media or physical delivery or publication media. It becomes very crucial to see various high court rulings in favor of revenue, claiming uploading of notice on portal, is equivalent to serving the show cause notice, while other high courts, held in against. GUIDELINES Instruction No. CCT/0707/10/2023 dated 11-10-2023 issued in Gujarat, which is directed to drop the proceedings in the case which are mentioned above. So, we can expect that suitable arrangements be made to prioritize disposal of the few categories of cases as explained above by dropping the demand if the above-stated defects/ weakness are found as highlighted above. 34

I. T. MIRROR (2023-24) 35 Ÿ If an audit has been conducted and the software issues a notice, it will be dismissed. Similarly, if proceedings under section 61 have been completed and the software generates a notice for the same matters, it is necessary to discard the notice concerning the scrutinized matters. Ÿ In cases where proceedings under section 70 (summons) had been done and if a notice covering the same matters is issued, it must be dropped to the extent of those matters. Ÿ Similarly, if proceedings under section 74 have been completed or are pending, and a notice is issued covering the same subject matter, the notice shall be dropped to the extent of those matters. Ÿ In situations where DRC-03 or DRC-07 has already been processed, and a notice covering the same subject matter is issued, the notice should be dropped to the extent of those matters. Ÿ If invoices have not been issued for the supply of goods or services, and proceedings under section 122 have been carried out, any notice issued for the same cases will be dropped. Notices based on HSN/SAC of blocked credits should be subject to officer verification, and if the person is legitimately doing business in such HSN/SAC, the notice in such cases will be dropped. Furthermore, before issuing the show-cause notices, the proper officer should properly examine the case or discrepancy and then accordingly should act. Now, the show cause notices issuedare purely based on digits,andthe relevant provisions thatare contravened by the noticeeare not mentioned. CONCLUSION Furthermore, the plea is made for the exercise of the extensive powers vested in the proper officer under various sections of the GST framework, such as the scrutiny of returns (section 61) and audit (sections 65 and 66). This proactive engagement could potentially obviate the need for direct issuance of show cause notices, promoting a more streamlined and collaborative resolution process. Such an approach aligns with the overarching goal of fostering a business-friendly environment and minimizing adversarial interactions between taxpayers and tax authorities. As we move forward, a balanced and nuanced application of statutory provisions will contribute to the overall effectiveness and fairness of the GSTcompliance framework. In conclusion, the impending deadline of 31.12.2023 for the issuance of show cause notices of FY 2018-19 under section 73 of the CGSTAct necessitates a proactive and judicious approach. It is hoped that due consideration will be given to addressing the concerns raised, leading to a reduction in potential litigation.

The expressions legal heirs and legal representatives' are used very loosely and interchangeably without knowing their importance relevance and consequences. The Civil Procedure Code does not define the expression legal heir' Section 2(11) of the Civil Procedure Code ('Code' for short) defines the expression legal representative' as a person who in law represents the estate of a deceased and includes a person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party or suing or sued. Order XXII of Code, which deals with death, marriage and insolvency or parties refers only to legal representatives and not legal heirs. The term "legal heir' is ordinarily used or referable only when it relates to the law of succession. In SANTHA SATHIYANESAN AND D.I. SATHIYANESAN VERSUS R.C. SATHIYANESAN (DIED), BEULAMOHAN, GHEENARAVI AND SUB REGISTRAR, MADURAI DISTRICT- 2023 (12) TMI 470 - MADRAS HIGH COURT, the distinction between the two expressions legal heir and legal representative' have certain bearing on the facts of the case. Let us see the facts of the case. Shri Sathiyanesan purchased the suit property on 17.08.1983. He executed a will in favor of his wife on 11.09.1997. He left home. Since he did not return to home even after the lapse of 7 years it was presumed that he was dead. In view of the said development his wife executed a settlement deed in favor of her son. In the meantime Sathiyanesan returned home. He came to know of the settlement deed executed by his wife he cancelled the will on 04.05.2011. Then he filed a suit before the District Munsiff Court, Madurai challenging the settlement deed. The wife and son were arrayed as defendants in this suit. He also executed a fresh will bequeathing the suit property to his two daughters. Pending the suit Sathiyanesan expired and the suit was dismissed as abated. On coming to know of the litigation, the daughters of the plaintiff, Sathiyanesan, filed two applications seeking to set aside the abatement order and bring themselves on record as the legal representatives of the plaintiffs. The trial court allowed the applications of the daughters of the deceased. Being aggrieved against the orders of District Munsif the revision petitions were filed before Madurai Bench of Madras High Court. The revision petitioners submitted the following before the High CourtŸ The daughters are seeking to implead themselves claiming under the will of their father and therefore, the original cause of action in the suit cannot survive to the benefit of the daughters and they cannot be permitted to be impleaded in the suit. Ÿ Order XXII Rule 9 CPC would not be available to the daughters since the wife and sons of the deceased plaintiff were already parties to the suit. Therefore there was no question of abatement. Ÿ Even if the cause of action survives, then the defendants would be legal heirs of the plaintiff and the suit cannot be proceeded on the original cause of action on which the suit was filed by the plaintiff. Ÿ The suit was dismissed for default and not as abated and therefore the IAs filed by the daughters was not maintainable Ÿ The daughters also filed an IA seeking amendment of the plaint and such conduct would clearly demonstrate Legal Heir v. Legal Representatives - CS M. GOVINDARAJAN 36

I. T. MIRROR (2023-24) 37 that the daughters were not in a position to prosecute the suit on the basis of the original cause of action and only to get over the same, they have chosen to take out an amendment application. Ÿ Though they are legal heirs of the deceased, they did not file the applications on the basis of being legal heirs but chose to approach the court only based on the alleged will executed by their father, the plaintiff. In such circumstances the trial court committee serious error in entertaining both the applications of the daughters, the respondents in this case. The respondents submitted the following before the High CourtŸ The wife and son of the deceased played fraud on the plaintiff by approaching the revenue authorities and obtaining a death certificate of the plaintiff knowing full well that he was alive and living with them and if he was not heard of for more than 7 years. Ÿ They brought about the settlement deed drawing from the strength of the Will executed by the plaintiff in favor of his wife. Ÿ The petitioner cannot get any iota of right, title in the subject property, that too, claiming under the Will executed by the plaintiff. Ÿ The petitioners tried to knock away the property during the life time of the plaintiff. Ÿ The plaintiff came to know the said fact only when he tried to mortgage the said property. Ÿ Therefore the plaintiff, immediately he approached the Court for cancellation of the Will. Ÿ The relationship of the respondents and plaintiff has not been disputed by the petitioners. Ÿ They have filed the revision petition only to prolong the litigation. Ÿ Applications by a legal heir, who is not a party is well maintainable under Order IX Rule 9 of the Code. The High Court considered the submissions of the parties to the revision petitions. The only contention of the petitioners is that the original cause of action did not survive with the death of the father, and at any rate Order XXII Rule 9 of the Code could not apply since the wife and son were already on record as parties. It is further contended that the daughters claimed under the second will executed by their father the validity of which could not be made an issue in this suit. The only alternative was for the daughters to file a fresh suit on the basis of second will. The High Court dismissed the revision petitions and affirming the orders of the trial court. The High Court heldŸ On a conjoint reading of Section 2(11) and Order XXII Rule 3 of the Code it is clear that the persons claiming to be legal representatives of the deceased plaintiff are also entitled to make an application under Order XXII Rule 9 of the Code. Here the daughters are claiming only as legal representatives having become entitled to the estate of their father, Ÿ The language employed in Order XXII Rule 9 of the Code entitles even a person claiming to be legal representative of the deceased, to apply for an order to set aside the abatement of dismissal of the suit and the only requirement was to show sufficient cause as to how the said legal representative was prevented from continuing the suit. Ÿ It cannot be said that the cause of action available for the plaintiff and the cause of action available for respondents 1 and 2 is entirely different when the respondents only stepped into the shoes of their father and they are well within their rights to challenge the settlement deed executed by the mother in favor of the brother. If the revision petitioners challenge the settlement deed executed by the mother in favor of the brother. If the revision petitioners challenge the truth and genuineness of the Will under which the respondents claim to the legal representatives, it is always open to them to attach the genuineness of the Will in the course of the trial.

In the realm of real estate, numerous terms are associated with residential complexes. One such term that frequently approaches is 'common area.' Simply put, a common area refers to a shared space within a residential or commercial complex that is collectively funded by all its residents. In this context, every owner in the Project is considered a co-owner of these communal spaces, and the ownership is distributed equally among all the residents. If a Developer /Promoter offers you the super-built area of a house, the entire area, including the common areas, is included in it. Order XXII of Code, which deals with death, marriage and insolvency or parties refers only to legal representatives and not legal heirs. The term "legal heir' is ordinarily used or referable only when it relates to the law of succession. As per section 2(n) of the RERA Act, 2016, “Common Area” includes: Ÿ The entire land for the real estate project, or if the project is developed in phases and registration under the RERA is sought for a phase, the entire land for that particular phase. Ÿ Staircases, lift, elevators, elevator lobbies, fire escapes, and common entrances and exits of buildings. Ÿ Common terraces and basements, parks, play areas, open parking areas, and common storage spaces. Ÿ The premises for lodging of persons who are employed for the management of the property, including accommodation for watchmen and ward staff, or for the lodging of community service personnel. Ÿ All community and commercial facilities as provided in the real estate project. Ÿ Installations of central services such as electricity, gas, water and sanitation, air-conditioning and incineration, and systems for water conservation and renewable energy. Ÿ Water tanks, pumps, motors, compressors, fans, ducts, and all apparatus connected with installations for common use. Ÿ Other portions of the project necessary or convenient for its maintenance, safety, etc. and in common use. Not only RERA but Apartment Act also have some guidelines for common area: Ÿ Before the association of allotters takes over, the developer is responsible for preserving common areas. Ÿ The responsibility for the common area maintenance falls on all members of society. Ÿ The landlord is liable for the maintenance of the common areas in the case of commercial property. When it comes to an area that is shared by all there are various questions attached to it. We offer you answers to common questions as under: 1. Who's Responsible for the Maintenance of the Common Area? All allottees are equally accountable for open areas and their maintenance. The Real Estate Act (RERA) specifies that it should be the responsibility of every allottee to make payments to maintain the property and COMMON AREA –COMMON OWNERSHIP –COMMON QUESTIONS CA HARSH MEHTA ADV (CS) LOKESH SHAH 38

I. T. MIRROR (2023-24) 39 the premises. All citizens collect a stipulated fee and this goes towards operational expenses undertaken to protect the community areas. 2. Can It Be Possible to Inherit and Pass Common Area? No, It is not possible to inherit or transfer common areas and facilities by sale, mortgage, lease, gift, or swap, along with an undivided interest in common areas to any third party. The reference may be made to the decision of this Court in case of HarikrushnadasChhaganlal, Nanalal&IshwardasMohanlalSevaSamaj Trust v. Vinodchandra G. Vaghela reported in 2010 (2) GLR 1820 wherein at paras 4, 5 and 6 it was observed as under: “4. It is an admitted fact that the society has sold the land of the common plot to the petitioner. It can hardly be disputed that the land of the common plot in any residential society is meant for common use and common purposes of all members of the society, and all members of the society, so far as common plot and common facilities and common area are concerned, they are holding joint and common interest in such portion. It is not the case of the respondent society that the land has been permitted to be used for creating of any common facilities for the members of the society.’’ 3. If you are not using common areas and services, do you pay maintenance charges? According to the Apartment act, 'No apartment owners may exempt themselves from liability for their contribution towards the common expenses by waiver of the use or enjoyment of any of the common areas and facilities or by the abandonment of their apartment' In simple words, 'yes' it is mandatory for all to pay maintenance charges. 4. Common Area to be utilized by all members. In the Gujarat RERA judgement for the case law of Members of Nilkanth Villa Vs. Pari Infra, it was enacted that : A Common area between two concerned Projects was separated by a compound wall, and thus the common area was divided, and was the cause of complaint between the members of both the Projects, but later on through the Order of the Hon'ble Authority , the common compound wall was ordered to be demolished and the common area was allowed to be used by both the Project members. 5. How Can Common Areas Be Identified? Information on the property on which the building was constructed and the common areas and amenities must be included in the sale documents of the apartment and its registration papers. It should also note whether the property is freehold property or leasehold and whether the lease period is a leasehold property. It should also include the percentage of an undivided interest in the common areas and services relating to the apartment. It must also explain the restricted common areas and services. 6. Can Members Parking can be sold ? Open Parking cannot be sold to any particular allottee, as the parking is considered as the common area as per the definition of “Common area”as per RERA Act. But any parking which is covered and not open, cannot be considered as the common area and thus can be sold to individual. Maharashtra Real Estate Regulatory Authority in the Complaint No. CC006000000089761 –in the matter of Mr. Deepesh S Singh Vs M/s. Neelkanth Constructions , ordered that “With regard to the car parking, the MahaRERA directs that the respondent is entitled to sell only covered car parking and no cash money be demanded from the allottees.”

I. T. MIRROR (2023-24) 7. Is It Possible to Sell Common Roof Rights Through a Developer? Giving or selling exclusive rights to the terrace or rooftop is an unethical activity in a housing society. All other common terraces belong to a resident unless the terrace is attached to a unit. A terrace, if inaccessible from common areas, is private. It is not possible to buy or sell common terrace space and is, thus, not included in the floor area ratio (FAR). Buyers may contact the consumer forum or even bring a civil lawsuit against the contractor if a developer participates in such unfair practices. An extract of the above case law clearly depicts the same: “If such an approach is permitted in cooperative societies, it would result into encouraging the oppression over minority members by the majority members and thereby the majority members would be in a position to nullify the rights for common use of the common plot which would run counter to the Cooperative Principles and would also frustrate the purpose for which the common plot is earmarked in any residential colony. The aforesaid is coupled with the circumstance that no common plot which is earmarked at the time of N.A can be converted for any exclusive use of any member or any person without prior permission of the competent authority under the Bombay Land Revenue Code read with the rules. It is not the case of the society that there was alteration in the N.A plan which was approved by the competent authority under the Bombay Land Revenue Code read with the rules and the common plot had ceased to be common plot. But, it appears from the resolution of the society that the common plot has continued as the common plot and the very area of common plot is resolved to be sold to the trustees of the petitioner trust. It may be recorded that even if section 73 of the Gujarat Cooperative Societies Act is read in its liberal interpretation so as to vest the final authority of the society in the General Body of the members, such powers are subject to the provisions of the Act and the Rules. There is no power under the Act contemplated or vested with the General Body to take away the interest created in favour of the member over the common plot for common use. Further, such powers cannot be read to commit illegality of converting the land for exclusive view of any member in contravention to the provisions of the Bombay Land Revenue Code read with the Rules. Therefore, under these circumstances, merely because the General Board had passed the resolution for sale of the common plot is not valid ground to deny the entertainment of the grievance by one member of the society who had common interest for common use of the common plot of the society. Therefore, the contention of the learned counsel for the petitioner cannot be accepted.” (Emphasis supplied) 8. Can We Use a Common Area for Other Purposes? For other purposes, common areas may be used but not 'converted' by an entity for some other use that serves his/her personal interest. For instance, it won't become a parking spot if someone tries to park a car in the common area. Residents, both tenants, and owners should refrain from invading common areas, since there are many co-owners lawfully, and your actions should not prohibit them until and unless you have special authorization from the apartment association. We trust that this article has addressed your inquiries regarding the common area. 40

Glimpses of 73rd RRC at Amritsar

Glimpses of 73rd RRC at Amritsar